G.R. No. 151245 - Clemente vs. Razo

The dispute involves a parcel of land in Legazpi City with an area of 216 square meters.
The property was originally covered by Original Certificate of Title (OCT) No. 30 issued on 24 March 1966 in the name of Antonia Alaurin, married to Tomas Adamos.
The title was entered pursuant to a Miscellaneous Sales Patent dated 14 March 1966.
There were multiple litigations involving the property between the original owner, Antonia Alaurin, and the Yaptengco spouses (Santos Yaptengco and Gregoria Yaptengco Keh).

Civil Case No. 4391 was initiated by Antonia Alaurin against the Yaptengco spouses as an action for recovery of possession.
A subsequent case, Civil Case No. 4412, was commenced by the Yaptengco spouses against Antonia; however, it was later withdrawn and dismissed on 7 February 1975.
Amid the pending Civil Case No. 4412 and after the death of Tomas Adamos, on 14 March 1976, Antonia and her two legitimate children (Salvacion and Ester) executed a Deed of Extrajudicial Partition and Sale selling the disputed land to Eugenio Razo, even though the sale was not formally registered.

Civil Case No. 5595, an action for annulment of the Miscellaneous Sales Patent, was filed by the Yaptengco spouses against Antonia, her children, and the Director of Lands; this case was later consolidated with Civil Case No. 4391.
A compromise agreement was reached between Antonia Alaurin and the Yaptengco spouses, in which the latter recognized Antonia as the owner of the land.
On 20 February 1992, Gregoria Yaptengco Keh filed a petition with the Regional Trial Court for the issuance of another owner’s duplicate original copy of OCT No. 30.
An affidavit by Adelina Alaurin, allegedly attesting that Antonia and her children sold the property to Gregoria Yaptengco Keh, was submitted. On 24 August 1992, the petition was granted.
Consequently, OCT No. 30 was cancelled and, on 27 August 1992, Transfer Certificate of Title (TCT) No. (P) 911 was issued in the name of Gregoria Yaptengco Keh.

On 18 September 1992, Gregoria Yaptengco Keh sold the land to Ken Marten Clemente and Charlie Clemente III, who, as minors, were represented by their mother and natural guardian, Lorena P. Clemente. This sale was duly registered.
TCT No. (P) 911 was cancelled and replaced by TCT No. (P) 914 on 30 September 1992 in the name of the petitioners.
On 17 January 1996, respondents (successors-in-interest of Eugenio Razo) filed an action for annulment of title and/or reconveyance (Civil Case No. 9170) in the Regional Trial Court at Legazpi City.
The trial court, on 21 January 1997, rendered judgment in favor of the petitioners, finding that they were innocent purchasers for value.
The respondents then appealed, resulting in the Court of Appeals reversing and setting aside the trial court’s decision on 10 August 2001. A subsequent motion for reconsideration by the petitioners was denied on 15 November 2001.

Points Raised in the Appellate Decision and the Supreme Court’s Intervention

The Court of Appeals faulted the petitioners for allegedly not verifying beyond the face of TCT No. (P) 911, suggesting that more diligence should have been exercised by Lorena P. Clemente regarding the irregular transfer and cancellation of OCT No. 30.
The petitioners maintained that they relied solely on the face of TCT No. (P) 911, which showed no encumbrances or irregularities, and that prior to the sale they verified with the Register of Deeds and conducted an ocular inspection confirming the seller’s possession.
The Supreme Court’s issue turned on whether the petitioners may be considered innocent purchasers for value given the circumstances surrounding the title’s chain of transfers and alleged irregularities.

Whether the petitioners, by relying solely on the face of TCT No. (P) 911 at the time of sale, may be deemed innocent purchasers for value despite alleged irregularities in the cancellation and transfer of OCT No. 30.

Whether the petitioners’ due diligence was sufficient under the Torrens system.
Whether the exception to relying solely on the certificate of title applied in this case.

Whether the reversal by the Court of Appeals, which faulted the petitioners for not delving into the origin of the title (OCT No. 30), is consistent with established jurisprudence and the principles of the Torrens system.

Whether actual knowledge of irregularity or suspicion is a necessary precondition for requiring further inquiry into the title.
The applicability of the rule that a purchaser dealing with a Torrens title may rely on the certificate's face as conclusive evidence of the title's validity.